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Re: Kotlikoff: When Should you Take Social Security?

I'm always amazed at people that have no interest in planning or learning how simple, in this case, no-cost decisions, could change their living standard for many, many years. In this case, it's 43 years of an inflation-adjusted $13,171 of annual extra household discretionary spending just by rearr...
by DR
Thu Mar 19, 2015 7:24 pm
 
Forum: Personal Finance (Not Investing)
Topic: Kotlikoff: When Should you Take Social Security?
Replies: 220
Views: 19895

Re: Kotlikoff: When Should you Take Social Security?

Of course you can still get Medicare at age 65 even if you postpone other benefits to age 70. I'm not familiar with Medicaid rules, but certainly someone at or near poverty level (what it takes to qualify for Medicaid) would not be delaying SS benefits anyway I suppose.
by DR
Wed Mar 18, 2015 6:46 am
 
Forum: Personal Finance (Not Investing)
Topic: Kotlikoff: When Should you Take Social Security?
Replies: 220
Views: 19895

Re: Kotlikoff: When Should you Take Social Security?

Aaaa, just kind of fun. Thanks for raising the topic.
by DR
Tue Mar 17, 2015 10:49 pm
 
Forum: Personal Finance (Not Investing)
Topic: Kotlikoff: When Should you Take Social Security?
Replies: 220
Views: 19895

Re: Kotlikoff: When Should you Take Social Security?

For the sake of our discussion I reran my ESPlanner reports to compare my household SS at 62 instead of 70 (with file/suspend). There's a 5 year age difference between my wife and I. If we both take at age 62 I would have to pay a 15,045 earnings deduction my first year at age 62 (ouch!) and then fr...
by DR
Tue Mar 17, 2015 9:26 pm
 
Forum: Personal Finance (Not Investing)
Topic: Kotlikoff: When Should you Take Social Security?
Replies: 220
Views: 19895

Re: Kotlikoff: When Should you Take Social Security?

The free version at basic.esplanner.com is not robust enough for serious planning. It will do a good job of illustrating the concept though. But it doesn't collect earnings history on SS so it's merely an estimate or best guess. Why bother. The $149 version at http://www.esplanner.com will take your...
by DR
Tue Mar 17, 2015 1:48 pm
 
Forum: Personal Finance (Not Investing)
Topic: Kotlikoff: When Should you Take Social Security?
Replies: 220
Views: 19895

Re: Kotlikoff: When Should you Take Social Security?

Indeed you did! It may not pay to work in your case. Yes, that 85% is a hit.
by DR
Tue Mar 17, 2015 11:48 am
 
Forum: Personal Finance (Not Investing)
Topic: Kotlikoff: When Should you Take Social Security?
Replies: 220
Views: 19895

Re: Kotlikoff: When Should you Take Social Security?

Yes, now that I think about it, the people I know that have taken it early (I can't think of anyone I know that's waited til 70) did so not because they couldn't afford to wait, but because they didn't know how to draw down available assets to smooth them over--or such a thought never occurred to th...
by DR
Tue Mar 17, 2015 9:57 am
 
Forum: Personal Finance (Not Investing)
Topic: Kotlikoff: When Should you Take Social Security?
Replies: 220
Views: 19895

Re: Kotlikoff: When Should you Take Social Security?

Well, you are right. That's even more amazing. Oddly, or ironically, its the rhetoric of fear that is also behind this, not just the framing concept of "break even." I say ironically because Kotlikoff himself is one of the most vocal critics of SS, glibly saying "it's bankrupt" a...
by DR
Tue Mar 17, 2015 9:32 am
 
Forum: Personal Finance (Not Investing)
Topic: Kotlikoff: When Should you Take Social Security?
Replies: 220
Views: 19895

Re: Kotlikoff: When Should you Take Social Security?

I too find this framing analysis really interesting. Kotlikoff is framing things differently (and more sensibly) and this is helping people see a different dimension to things. In fact, that earlier poster who mentioned creating a financial plan that scheduled one to die at age 81 was also framing t...
by DR
Tue Mar 17, 2015 6:41 am
 
Forum: Personal Finance (Not Investing)
Topic: Kotlikoff: When Should you Take Social Security?
Replies: 220
Views: 19895

Re: How to create a 3% return portfolio?

I was back testing with those specific funds and couldn't get further back than 2002 in my citations above. But if I switch to the asset classes (instead of those two specific Vanguard funds) I can back test to 1972-2014. I used Large Cap Growth and Total Bond classes. There we see the compound annu...
by DR
Mon Mar 09, 2015 1:44 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to create a 3% return portfolio?
Replies: 52
Views: 5477

Re: How to create a 3% return portfolio?

Also, if you switch your allocation to 10/90 you'll see on that backtest that your standard deviation drops further to 3.39 and your compound annual growth rate to 4.78% and you would never have had a negative year in that time period from 2002-14. Your best year would have been 8.44% in 2009. Perha...
by DR
Mon Mar 09, 2015 1:39 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to create a 3% return portfolio?
Replies: 52
Views: 5477

Re: How to create a 3% return portfolio?

I think this is a great question and indeed a great way to think about things--if you trust your model for how much you need. Back testing this portfolio using portfolio visualizer shows promising results. It only tracks those two funds back to 2002 and this was a very good decade for bonds, but I h...
by DR
Mon Mar 09, 2015 1:22 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to create a 3% return portfolio?
Replies: 52
Views: 5477

Re: Social security strategy with wide age gap between spous

Just spend the $40 at maximizemysocialsecurity.com and find out.
by DR
Wed Feb 18, 2015 7:31 pm
 
Forum: Investing - Theory, News & General
Topic: Social security strategy with wide age gap between spouses?
Replies: 18
Views: 1661

Re: [Annual POLL] What was your 2014 return?

MY XIRR return was 6.65%

I had 77% bonds (intermediate term) and 23% stocks (S&P index).
by DR
Thu Jan 01, 2015 4:46 pm
 
Forum: Investing - Theory, News & General
Topic: [Annual POLL] What was your 2014 return?
Replies: 144
Views: 14713

Re: What are you up YTD?

I"m 22/78 (stock/bond) and my YTD is 6.49% Bonds were intermediate term, and stocks were a mix, but a lot of S&P though I had some small cap world, and other growth stocks.
by DR
Wed Dec 31, 2014 6:47 pm
 
Forum: Investing - Help with Personal Investments
Topic: What are you up YTD?
Replies: 271
Views: 30501

Re: Portfolio simulation tools

In the FAQ data sources, I can't figure out what is referencing intermediate term bonds (AGG) on the user input site. You have a tax exempt intermediate term bonds. But why no ordinary int. term bonds that track the AGG as your data source suggests?
by DR
Mon Dec 08, 2014 8:27 am
 
Forum: Investing - Theory, News & General
Topic: Portfolio simulation tools
Replies: 12
Views: 2005

Re: Suddenly Retired, do I have enough?

I'm a little late to the discussion here, but someone mentioned Firecalc, so I thought I'd mention ESPlanner. I am an expert using this dynamic planning calculator. There's really not enough information here to get a reliable report, but there is enough to get a sense of the cash flow issues I think...
by DR
Sun Dec 07, 2014 11:22 am
 
Forum: Investing - Help with Personal Investments
Topic: Suddenly Retired, do I have enough?
Replies: 42
Views: 7070

Re: How to describe HSA tax advantage return

Right. Yes, it's just for me in my own mind.
by DR
Wed Nov 05, 2014 9:32 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to describe HSA tax advantage return
Replies: 2
Views: 451

Re: Planning our retirement

You might be asking about asset allocation? For myself, I'm mostly concerned with lifetime discretionary spending. If I can enjoy a lifetime discretionary spending (i.e, available spending after any off the tops like mortgage, Medicare Part B, contributions to retirement) of (I'll guess at some numb...
by DR
Wed Nov 05, 2014 2:42 pm
 
Forum: Investing - Help with Personal Investments
Topic: Planning our retirement
Replies: 3
Views: 451

How to describe HSA tax advantage return

Hi Folks, I recently did some analysis on using my HSA as a savings tool. The case looks like this: --28% tax bracket 4% state taxes --able to contribute the "catch-up" maximum of $7,550 per year for the next six years --assume 3% nominal return on the HSA and 3% on the taxable account (ac...
by DR
Wed Nov 05, 2014 2:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to describe HSA tax advantage return
Replies: 2
Views: 451

Re: Portfolio simulation tools

http://portfoliovisualizer.com/

I think this one is pretty cool.
by DR
Sat Nov 01, 2014 3:45 pm
 
Forum: Investing - Theory, News & General
Topic: Portfolio simulation tools
Replies: 12
Views: 2005

Re: What are you up YTD?

I'm up 5.73 (annualized) YTD

21% S&P index
79% intermediate bonds

Not much volatility for me this year.
by DR
Sat Nov 01, 2014 3:37 pm
 
Forum: Investing - Help with Personal Investments
Topic: What are you up YTD?
Replies: 271
Views: 30501

Re: struggling to understand "bond crash"

Yes, there's a lot of that kind of talk out there. But in this talk it's often easy to miss distinctions that these writers do not point out (because it would lower the scare factor in the narrative). For example, the concern we should have is holding long term bonds (in most but not all situations)...
by DR
Mon Sep 01, 2014 1:21 pm
 
Forum: Investing - Theory, News & General
Topic: struggling to understand "bond crash"
Replies: 13
Views: 2181

Re: Resetting Equity Target -a.k.a Portfolio Allocation

It seems way too doctrinaire or absolutist to be saying what allocation he "should" have. For example, why say "25% stocks is way too low"? I don't see how anyone can make this evaluation for someone with such certainty or confidence. His software (ESPlanner) shows him his living...
by DR
Mon Sep 01, 2014 9:16 am
 
Forum: Investing - Help with Personal Investments
Topic: Resetting Equity Target -a.k.a Portfolio Allocation
Replies: 19
Views: 1346

Re: Which retirement plan is better?

Again, I think it's interesting (and encouraging I think) that a defined benefit plan (pension) is offered at a university--or anywhere these days I guess. Even though I like the guarantee that goes with the pension, I would probably choose the 403b and contribute--particularly here where my rough m...
by DR
Thu Jul 18, 2013 2:50 pm
 
Forum: Investing - Help with Personal Investments
Topic: Which retirement plan is better?
Replies: 24
Views: 1855

Re: Which retirement plan is better?

My university in Michigan does a 12% match in the 403b. I'm surprised to learn there are universities that offer a DB plan.
by DR
Thu Jul 18, 2013 11:15 am
 
Forum: Investing - Help with Personal Investments
Topic: Which retirement plan is better?
Replies: 24
Views: 1855

Re: Which retirement plan is better?

I figured 30 years old and retiring at age 65. I assumed inflation at 3% and a salary that keeps pace with that but he'll do better than that since promotion to full means some boost to salary etc. But I double checked my numbers and I see now that I didn't look far enough down my table. I reran the...
by DR
Thu Jul 18, 2013 10:57 am
 
Forum: Investing - Help with Personal Investments
Topic: Which retirement plan is better?
Replies: 24
Views: 1855

Re: Which retirement plan is better?

My calculator (ESPlanner) shows it's pretty much a wash, with the Pension option doing a little better. But, there's so many, many assumptions that have to be made that it's hard to compare without a lot more information. Furthermore, it's not really apples to apples: for the defined benefit plan ma...
by DR
Thu Jul 18, 2013 9:42 am
 
Forum: Investing - Help with Personal Investments
Topic: Which retirement plan is better?
Replies: 24
Views: 1855

Re: Dinner Guest Issues

Do you live in Michigan? I'll come and not complain!
by DR
Tue Jan 01, 2013 6:14 pm
 
Forum: Personal Consumer Issues
Topic: Dinner Guest Issues
Replies: 149
Views: 12366

Re: 2013 BOGLEHEAD CONTEST REGISTRATION

1611.06
by DR
Tue Jan 01, 2013 2:18 pm
 
Forum: Investing - Theory, News & General
Topic: 2013 BOGLEHEAD CONTEST REGISTRATION
Replies: 481
Views: 15742

Re: What was your 2012 return?

Results for 2012: CAGR 10.68% AVG Monthly Return 0.85% SD Monthly Return 0.83% Sharpe 1.03 At the end of 2012, portfolio is about 30/70 stocks/bonds. At the end of 2011, portfolio was about 12/88 stocks/bonds, so I added stocks during the 2012. Basically I bought VEU and VGK every time they dipped....
by DR
Tue Jan 01, 2013 2:10 pm
 
Forum: Investing - Theory, News & General
Topic: What was your 2012 return?
Replies: 275
Views: 20567

Re: How to calculate return on a portfolio

Yes, that looks correct now! Excellent, thanks again for your help! I've always been curious how to properly calculate my return across both investment vehicles and now I know and have a working example for 2013 and beyond, very happy about that. Thanks! Yes, I really like the XIRR function. If you...
by DR
Tue Jan 01, 2013 11:22 am
 
Forum: Investing - Theory, News & General
Topic: How to calculate return on a portfolio
Replies: 55
Views: 4076

Re: How to calculate return on a portfolio

Yes, that looks correct now!
by DR
Tue Jan 01, 2013 10:42 am
 
Forum: Investing - Theory, News & General
Topic: How to calculate return on a portfolio
Replies: 55
Views: 4076

Re: How to calculate return on a portfolio

I don't believe you want to divide by 100 there in the formula. It is already going to give you a percentage. The return on that series is 2408.44% ! That's because you begin with $416 and end with $114K. I suspect you went into 2012 with some existing balance? You contributed 14,754 but end with $1...
by DR
Tue Jan 01, 2013 10:29 am
 
Forum: Investing - Theory, News & General
Topic: How to calculate return on a portfolio
Replies: 55
Views: 4076

Re: How to calculate return on a portfolio

It appears you may not have entered a beginning balance for the first entry at the beginning of the year.
by DR
Tue Jan 01, 2013 10:22 am
 
Forum: Investing - Theory, News & General
Topic: How to calculate return on a portfolio
Replies: 55
Views: 4076

Re: FSTVX vs VTSAX

Well, the VTSAX is cheaper.
by DR
Tue Jan 01, 2013 10:06 am
 
Forum: Investing - Help with Personal Investments
Topic: FSTVX vs VTSAX
Replies: 57
Views: 4068

Re: 3-Fund Approach Asset Allocation help

It's always kind of fun this time of year getting one's financial house in order! Good job. It's difficult to say the right allocation for somebody else. The 60/40 split is intense on stocks if you follow the conventional Bogle guide to hold bond percentage equal to your age (58% bonds). (See variou...
by DR
Tue Jan 01, 2013 10:02 am
 
Forum: Investing - Help with Personal Investments
Topic: 3-Fund Approach Asset Allocation help
Replies: 5
Views: 964

Re: What was your 2012 return?

I ended up at 6.37% overall annual return on a 15/85 (stocks/bonds) portfolio tracked with XIRR to track monthly contributions. The bonds were mostly positioned in FBIDX but also some ABNDX. My stocks were a mix of some American growth funds--my best performing equities fund was SMCWX where I got a ...
by DR
Mon Dec 31, 2012 10:53 pm
 
Forum: Investing - Theory, News & General
Topic: What was your 2012 return?
Replies: 275
Views: 20567

Re: Question about rate of return using XIRR

I don't believe you have to then separately calculate the geometric mean on that series of annualized returns. You simply run the XIRR function over the entire set of years at once--and this will give you the geometric mean or annualized return for the entire period.
by DR
Sun Dec 30, 2012 2:06 pm
 
Forum: Investing - Help with Personal Investments
Topic: Question about rate of return using XIRR
Replies: 10
Views: 1145

Re: "The rational thing to do is get out of bonds now."

Muchtolearn wrote:Another remarkable post by Nisiprius.


I agree. Nisiprisus, you should write a book.
by DR
Fri May 11, 2012 9:20 am
 
Forum: Investing - Theory, News & General
Topic: "The rational thing to do is get out of bonds now."
Replies: 130
Views: 10416

Re: bonds and bond funds once again

What I was thinking here was the principle that is outlined in this Schwab paper by Rob Williams: http://www.schwab.com/public/schwab/research_strategies/market_insight/investing_strategies/bonds/should_you_worry_about_bond_funds_if_interest_rates_rise.html I read your reference, but it just seems ...
by DR
Tue Sep 20, 2011 11:58 am
 
Forum: Investing - Theory, News & General
Topic: bonds and bond funds once again
Replies: 31
Views: 2672

Re: bonds and bond funds once again

I can't follow that reasoning at all. If you are going to profit from future higher bond interest rates, you have to buy bonds in the future when the rates are high, not now. What I was thinking here was the principle that is outlined in this Schwab paper by Rob Williams: http://www.schwab.com/publ...
by DR
Tue Sep 20, 2011 10:23 am
 
Forum: Investing - Theory, News & General
Topic: bonds and bond funds once again
Replies: 31
Views: 2672

You should never give the initials "FBDIX" and assume we know what you are talking about. You should write out the names of the funds in your post. You also spelled the fund "FBDIX" one time, and "FBIDX" the other time. FBDIX is the Franklin Biotechnology Discovery A F...
by DR
Tue Sep 20, 2011 9:22 am
 
Forum: Investing - Theory, News & General
Topic: bonds and bond funds once again
Replies: 31
Views: 2672

Re: bonds and bond funds once again

Spend a little time on Morningstar comparing FBNDX (a Fidelity bond fund which I'm using because it's an intermediate-term, investment-grade bond fund that's roughly comparable with VBMFX, but goes back to 1971) and Vanguard Wellesley Income (VWINX), which is around 40%, and ask yourself how you fe...
by DR
Tue Sep 20, 2011 8:43 am
 
Forum: Investing - Theory, News & General
Topic: bonds and bond funds once again
Replies: 31
Views: 2672

It is commonly said that the best predictor of total bond returns is current yield. So I suspect if you went back 60 months, you'd probably see a yield very close to 5.5%. If rates had remained flat, you would have gotten 5.5% entirely as interest. If rates had gone up, you would have gotten more i...
by DR
Tue Sep 20, 2011 7:46 am
 
Forum: Investing - Theory, News & General
Topic: bonds and bond funds once again
Replies: 31
Views: 2672

Thanks nisiprius. I'm pretty familiar with Bodie's Worry Free Investing. Indeed, his book has influenced my thinking about a 100% bond fund--but perhaps as you say I'm taking it to an extreme. He has next to nothing to say in that book about using bond funds or TIPS funds compared to buying the bond...
by DR
Tue Sep 20, 2011 7:16 am
 
Forum: Investing - Theory, News & General
Topic: bonds and bond funds once again
Replies: 31
Views: 2672

Mamster--those are good points. I like this notion of not buying something from the past! Right now the yield on that FBIDX fund is 2.89% and as of 8/31/2011 the YTD growth is 5.73%. Well, to be more precise, an investment of 10K in this fund on 1/1/2011 would, as of 9/16/2011 would be $10,619. I am...
by DR
Mon Sep 19, 2011 8:54 pm
 
Forum: Investing - Theory, News & General
Topic: bonds and bond funds once again
Replies: 31
Views: 2672

FBDIX from 1990-2005 the five-year rolling average rate of return is clearly between 6% and 9%. After 2005, the five year average looked at each month as a rolling rate is between 3% and 6%, just eyeballing it looks to be around 4%. But these are total returns. Now of course this could be a 20 year ...
by DR
Mon Sep 19, 2011 8:46 pm
 
Forum: Investing - Theory, News & General
Topic: bonds and bond funds once again
Replies: 31
Views: 2672

Thanks much everyone! I have read over and over that the interest rate change up or down has only a temporary impact on the total return. So it's not the declining interest rate environment that is causing these five-year rolling returns of 4%-6%. It's the dividends that are paid on the bond fund th...
by DR
Mon Sep 19, 2011 8:22 pm
 
Forum: Investing - Theory, News & General
Topic: bonds and bond funds once again
Replies: 31
Views: 2672
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